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SS2: COMMERCE - 2ND TERM

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  1. Marine Insurance | Week 1
    3 Topics
  2. Non-insurable Risks | Week 2
    4 Topics
  3. Banking - Central Bank of Nigeria | Week 3
    3 Topics
    |
    2 Quizzes
  4. Types of Account | Week 4
    4 Topics
    |
    2 Quizzes
  5. Warehousing | Week 5
    1 Topic
    |
    1 Quiz
  6. Capital | Week 6
    2 Topics
    |
    1 Quiz
  7. Credit | Week 7
    3 Topics
    |
    3 Quizzes
  8. Profit | Week 8
    2 Topics
  9. Turnover | Week 9
    3 Topics
    |
    2 Quizzes
  10. Business Law | Week 10
    8 Topics



Lesson Progress
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Underwriting means to indemnify an insured for risk or part of a risk. The cost involved to indemnify against certain losses such as the loss of an aircraft or ship could be too much for one insurance company to bear. This brings to synergy other insurance agents to work in a syndicate to underwrite different proportions of the risk. Thus, he is responsible only for the amount which he accepts to underwrite.

A good example is Lloyd’s Underwriters. It is the center of the marine insurance business in England. Lloyd’s itself is not an insurance company but a building that houses many insurance companies which work severally and in association. It is a central place where insurance representatives can be contracted. They are found in mostl parts of the world. Their functions include reporting of casualties to Lyoyd’s and the appointment of surveyors to inspect damages to ships and cargo.

Reinsurance: The risk involved in one venture may be too much for one insurance company to bear. One way of spreading out such risk is through reinsurance. The transfer of risk from one insurance company to another is called reinsurance. The purpose is to spread the risk so as to reduce the weight of loss. For example, the fire which guilted the Nigerian External Telecommunication Building in Lagos in 1983 caused a loss which cost the insurers about N30 Million to settle. Also, Aswani Textile’s loss of 1982 cost insurer Companies in Nigeria N25 Million to settle.

Losses of these magnitude are enough to liquidate an insurance company. Therefore, reinsurance and under writing of parts of the risk by different insurance companies will reduce the weight of loss for the affected insurance companies.

The Nigeria reinsurance corporation is a registered professional reinsurer. It commenced business in January, 1978. It receives 20% compulsory session of all policies issued by registered insurers within the market. The African Reinsurance Corporation accepts 5% of all policies issued by member companies.

Evaluation Questions

  1. Explain marine insurance
  2. List three types of marine insurance
  3. State five policies in marine insurance
  4. What is underwriting?
  5. Who is an underwriter?

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